In home computing configurations, an ISP often provides a physical device which both connects local hardware to the Internet and serves as a gateway. Such devices include DSL routers and cable routers.

In organizational systems a gateway is a node that routes the traffic from a workstation to another network segment. The default gateway commonly connects the internal networks and the outside network (Internet). In such a situation, the gateway node could also act as a proxy server and a firewall. The gateway is also associated with both a router, which uses headers and forwarding tables to determine where packets are sent, and a switch, which provides the actual path for the packet in and out of the gateway.

In other words, a default gateway provides an entry point and an exit point in a network.

Thus the usable network ranges from addresses 192.168.4.1 to 192.168.4.254. (TCP/IP defines the addresses 192.168.4.0 and 192.168.4.255 for special functions.)

The office's hosts will send packets addressed to IPs within this range directly, by resolving the destination IP address into a MAC address through an ARP sequence (if not already known through the host's ARP cache) and then enveloping the IP packet into a layer 2 (MAC) packet addressed to the destination host.

Packets addressed outside of this range (for this example, a packet addressed to 192.168.12.3) cannot travel directly to the destination. Instead they must be sent to the default gateway for further routing to their ultimate destination. In this example, the default gateway uses the IP address 192.168.4.1, which is resolved into a MAC address with ARP in the usual way. Note that the destination IP address remains 192.168.12.3, but the next-hop physical address is that of the gateway, rather than of the ultimate destination.

Router2 manages its attached networks and default gateway; router 3 does the same; router 1 manages all routes within the internal networks.

Accessing internal resources If PC2 (172.16.1.100) needs to access PC3 (192.168.1.100), since PC2 has no route to 192.168.1.100 it will send packets for PC3 to its default gateway (router2). Router2 also has no route to PC3, and it will forward the packets to its default gateway (router1). Router1 has a route for this network (192.168.1.0/24) so router1 will forward the packets to router3, which will deliver the packets to PC3; reply packets will follow the same route to PC2.

Accessing external resources If any of the computers try to access a webpage on the Internet, like http://en.wikipedia.org/, the destination will first be resolved to an IP address by using DNS-resolving. The IP-address could be 91.198.174.2. In this example, none of the internal routers know the route to that host, so they will forward the packet through router1's gateway or default route. Every router on the packet's way to the destination will check whether the packet's destination IP-address matches any known network routes. If a router finds a match, it will forward the packet through that route; if not, it will send the packet to its own default gateway. Each router encountered on the way will store the packet ID and where it came from so that it can pass the request back to previous sender. The packet contains source and destination, not all router hops. At last the packet will arrive back to router1, which will check for matching packet ID and route it accordingly through router2 or router3 or directly to PC1 (which was connected in the same network segment as router1).

The packet doesn't return If router1 routing table does not have any route to 192.168.1.0/24, and PC3 tries to access a resource outside its own network, then the outgoing routing will work until the reply is fed back to router1. Since the route is unknown to router1, it will go to router1's default gateway, and never reach router3. In the logs of the resource they will trace the request, but the requestor will never get any information. The packet will die because the TTL-value decrease to less than 1 when it is travelling through the routers or the router will see that it has a private IP and discard it. This could be discovered by using the Microsoft Windows utility Pathping or MTR on Unix-like operating systems, since the ping will stop at the router which has no route or a wrong route. (Note that some routers will not reply to pinging.)